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Taxes Don’t Take a Honeymoon When You Marry

When you are newly married, you begin a life that requires
many personal adjustments. A change in tax status requires
attention as well. Though getting married isn't a taxable event,
it is smart for couples to consider the tax issues at the outset.

If one of you is the major breadwinner, then getting married
might save some income taxes as the joint tax rates may well
reduce the top tax bracket that he/she is paying. In that case,
getting married before year-end would be wise. But if you are
both employed and earn similar incomes, you might end up paying
more taxes after marriage. In that case, you could consider
putting off the wedding until the first of the next year. Popular
tax-planning software can help you to project your tax
liabilities so that you can decide what's best.

Filing separately usually doesn't benefit married couples, since
those filing separately are barred from many deductions and
credits. But there are some instances when a separate return is
advised - when income needs to be reported separately to clarify
child support or alimony issues, or to qualify for your
children's scholarships.

You will need to make some necessary changes to reflect your new
status. If one or both of you has changed your name, you will
need to report the name change to the Social Security
Administration so that there won't be questions at tax time. The
required forms are available at www.ssa.gov . You will also want
to change the beneficiaries on retirement plans and life
insurance policies, if necessary, and file new W-4s with your
employer to revise your withholding status from single to
married.

Moving in together may also yield some tax benefits. If you have
ended up with multiple small appliances and house wares, donating
duplicates to charity will garner a tax deduction. Again, try to
do so before year-end, making a list from which to calculate the
value of the donation. Additionally, if you've just bought a home
together, the points paid on the loan are deductible in that
year.

Finally, some estate planning is in order. If you have any
children from a prior marriage, you should consider using A-B
trusts to avoid estate taxes upon death, give income to your
surviving spouse for life and pass the remaining assets to your
children. You may each need separate trusts to provide for your
new patchwork family.

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